New Garnishment Protections:
Social Security and Veterans Benefits
If you receive monthly social security benefits and/or veterans benefits, you may be relieved to know that as of May 1, 2011, these benefits now have higher protections from garnishment. Such federal benefits include social security retirement benefits, social security disability benefits, supplemental security income, and veterans pension benefits.
What is garnishment?
A creditor can take money in your bank account (or paycheck) if the creditor has gotten a court judgment against you. In other words, the court has ruled that you owe this creditor money so the creditor’s recourse is to have the money taken out of your bank account.
The federal benefits garnishment rule
The federal benefits garnishment rule has always been that federal benefits could NOT be garnished. In practice, as soon as the bank received a garnishment order, all bank account funds were frozen and most people never gained access to these funds again. If account holders ever did get the money back, it took a ton of paperwork and weeks or months.
The new treasury ruling: Bank must investigate
Upon receipt of a garnishment order, the bank must now determine whether the account has electronically received protected federal benefits within the past two months. If so, those monies cannot be frozen or given to a creditor.
Beware; the new treasury ruling applies to electronic transfers only
The new treasury ruling only protects monies electronically transferred. It does not apply to federal benefits delivered by paper check. It is likely in your best interests to switch from paper checks to electronic transfer.
In addition, monies deposited into your account, even if electronically, more than 2 months before the garnishment can be frozen.
Your recourse if federal benefit assets are frozen
You still can have these monies unfrozen, but you have to jump through the hoops of a paper appeal. It may take weeks or months to get your money back so you can pay your bills.
Where do I get help with my garnishment and bankruptcy questions?
Garnishment and bankruptcy is a very specialized area of law; be sure your attorney focuses his or her practice on bankruptcy and helping people like you. We focus our practice on bankruptcy law and help people just like you. You can reach us at 513-793-6555 or Thomasjr@geygan.com.
We will gently walk you through the bankruptcy process, answer your questions, analyze your case, and aggressively fight for your legal rights.
